Urban shrinkage is currently spreading at global level. At the same time, the scale of urban shrinkage is not limited to urban agglomerations, metropolitan areas, or big cities, but begins to expand to a vast number of small towns. Over the years, the characteristics, models, and mechanisms of shrinkage in large cities have attracted the attention of scholars; however, the problem of shrinkage in small towns has not been fully discussed. In China, small towns are located at the margins of cities and are the first part of the countryside; hence, they are the link and the bridge between urban and rural areas, and a space carrier to solve the diseases of big cities and for rural rejuvenation as a whole. However, in the process of rapid urbanization, some small towns have experienced urban shrinkage, mainly through a decline in township enterprises and the deterioration of the living environment, which has restricted their role in coordinating the spatial support of urban and rural development. Therefore, a correct understanding of the shrinkage of small towns has considerable theoretical and practical guiding significance. We focused on the towns of the Jilin Province as the research unit, and combined township population, economy, land use, and employment indices to establish an urban shrinkage index, identifying the status, spatial distribution, and influencing factors of small towns shrinkage in the Jilin Province. Moreover, we analyzed the similarities and differences of small towns shrinkage between the Jilin Province and developed countries. The results show that small towns shrinkage in the Jilin Province shares similar characteristics with developed countries, as well as important differences in aspects such as population migration, low-level industrial structure, and administrative division adjustments.